The UAE property market is one that captivates investors, renters and market experts from across the world, thanks to fantastic new developments and iconic existing ones. The eyes of the world are on us, and the question on everyone’s mind is: What’s coming up? We spoke to Mario Volpi of Kensington Exclusive Properties, voted one of the top 20 most influential real estate professionals in the city to find out his take on the 2018 Dubai property market forecast.
what’s in store for 2018?
It’s that time of the year again when ‘what’s in store for the property market in 2018’ is the question real estate brokers are constantly asked.
The truth is that most advisers can only guesstimate what is actually going to happen because several things can affect the course of any market. There is, however, one underlying theme that is always constant and one that will ascertain which way a market is heading. That constant is sentiment.
Sentiment can be described as the way the public feels about how things are going on in their lives, their job security and their finances. These will determine if they spend more or snap their wallets shut.
primary and secondary markets
This year we have witnessed a two-tier property market: Primary and Secondary.
The primary market has had an excellent run this year with over 70 % of all transactions being off plan. The secondary market has not fared so well and continues to struggle due to stubborn sellers asking for astronomical prices on one side, and unrealistic buyers who think the sky is falling on the other. These polar opposite points of view create a stand-off that can only be restored over time with both parties eventually moving closer to each other’s position.
concerns for 2018
My one concern for 2018 can be described in a single word: supply.
34,000 units are scheduled for delivery in 2018 and no doubt more off plan units will also be launched. This will make the market even more competitive, so watch out for better payment plans from developers.
According to the Dubai statistics centre, the population stands at 2.88 million and this figure is growing at only two percent per annum. Property supply, however, is growing at a much higher percentage than the population, so prices will, therefore, continue to soften in 2018
With construction going ahead on full steam and, therefore, many blue-collar workers swelling the current population; these individuals are normally housed in specific accommodation and hence, do not help absorb the supply/demand gap within the general residential market.
Fewer white collar workers are coming to Dubai, adding to the downward pressure on sales and rents, and many people continue to find less job security as companies struggle to balance their books.
impact of vat on the property market
While most people have brushed aside the impact VAT will have on the property market, I believe it will have a negative effect, despite it being set at only 5%. This extra amount we will now have to pay for goods and services will bring in some unfavourable sentiment.
Rents will also continue to slide in 2018, albeit at a slower pace than 2017.
Currently, there are approximately 500,000 residential units available with another 90,000 due for delivery in the next few years. This represents a significant supply of new units, therefore landlords will have to remain competitive not just in the actual rent they ask but also in the number of cheques requested.
what to expect
The keyword for next year will be quality as tenants will seek out cheaper options or move to better quality units for the same price as their existing units.
To predict what 2018 holds in store for the Abu Dhabi property market, one only has to look at what Dubai has gone through in the past. The Abu Dhabi market is not as dynamic as Dubai’s and is approximately 12-18 months behind so I see a continuation of softer prices in 2018. To get a better idea about how things evolved last year, you could take a look at the Dubai real estate market report for 2017, but we will have to wait and see how 2018 turns out for the Emirate.
about mario volpi
Mario Volpi is one of the city’s best-known and trusted property pros, with a local and international career spanning over 30 years. Apart from having a stellar sales career, Mario is also a respected contributor to several media publications and is regarded as one of Dubai’s go-to real estate experts.
Prior to his current role as Chief Sales Officer at Kensington Exclusive Properties, Mario led Prestige Real Estate, Asteco Property Management and Cluttons as well as Jackson-Stops & Staff – an upscale real estate agency in London’s Richmond.